Serious weaknesses In Cywain Centre grant funding

16 Apr 2014 - 4:26pm

Project not properly monitored and did not provide value for money says Auditor General

In providing grant funding for the Cywain Centre, a rural heritage tourist attraction in North Wales, the Welsh Government and other public sector funders did not adequately challenge flawed assumptions about the income the Centre would generate and a lack of clarity over what the Centre was meant to offer. Funders also failed to take appropriate steps to reduce the risks of the Centre failing. These are the main findings of an Auditor General’s report published today.

The Cywain Centre opened in April 2008 but soon ran into difficulties and finally closed in September 2011. The total estimated cost to the public sector was £2.2 million. However, by the time the Centre closed in 2011 the cost to the public sector had risen to more than £3.4 million.

Auditor General for Wales, Huw Vaughan Thomas, said:

My report on the Cywain Centre highlights some serious weaknesses in grants management by public sector bodies that existed at the time. Subsequently, there have been some improvements in the way grants funding is managed. My recommendations are intended to further strengthen these arrangements and ensure that Welsh Government grants deliver better value for money.

Today’s report found that all the public sector funders had recognised, to varying degrees, that the business case for the Centre was underpinned by unsupported and unrealistic assumptions. But despite this they approved grant funding, without putting effective measures in place to mitigate and manage the risks to the project that they had identified. Funders also placed too much emphasis on the potential benefits of the project, and did not collaborate in a way that supported effective decision making.

Once the Centre became operational, funders did not monitor its operations adequately and were slow to respond to the threat and actual closure of the Centre in order to protect the public’s interest in the assets.

The report into Cywain follows a number of other examinations by the Auditor General in recent years into grants funded schemes. These reports have identified significant changes in the way public bodies in Wales now manage grant funding, and today’s report suggests that these changes will make it less likely that the mistakes evident in the funding of the Cywain centre will be repeated.

However today’s report does recommend two further changes:

The Welsh Government should take steps to ensure all public sector funders are aware of the risks when assessing individual projects, through for example all project assessments being shared between funders or by having one financial appraisal undertaken on behalf of all funders.

When funders know a project is in severe difficulties and is approaching or is past the asset retention period they should take urgent steps to protect the public’s interests in the assets.